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Google Guilty Of Anti-Competitive Conduct, Says Competition Regulator

The Competition Commission of India has found search giant Google guilty of abusing its dominant position in India and imposed a penalty of Rs 136 crore, according to the order posted on its website. The penalty amounts to 5 percent of Google’s average total revenue from India operations in the last three years.

The case against Google dates back to 2012 when Bharat Matrimony, now known as matrimony.com, and Consumer Unity & Trust Society had complained to the competition regulator about Google’s anti-competitive behaviour. The internet giant provides online search services and online advertising business, namely AdWords and AdSense.

The complainants had submitted to the CCI that Google is dominant in both online general web search services and online search advertising services market in India. During the course of investigation, Facebook, Flipkart, Make-my-Trip.com and several other entities submitted that Google is abusing its dominant position in India.

As per the complainants, Google abused its dominant position by:

Favouring its own services and of its partners by manually manipulating its search results.

Indulging in search bias, that is, manipulating the search algorithm to suppress results of competition and unfairly promoting its own services like Google News, YouTube, Google Maps etc. This reduces traffic to competing specialised search services.

Leveraging its dominance in the online search market to unduly benefit its own services like YouTube, Google Maps etc.

Prohibiting advertisers from advertising on words that might be confused with Google’s trademarked words.

Making it difficult for advertisers to use competing platforms by imposing prohibitive switching costs. Since Google is an essential trading partner because of its dominance, advertisers are forced to stay with it.

In an emailed response, Google said it is “reviewing the narrow concerns identified” by the CCI and assessing “next steps”.

In 2015, CCI’s investigation arm – Director General, Investigation – in its final report had noted that based on market share, size, resources, economic power, commercial advantages etc, Google was dominant in the Online General Web Search Services and Online Search Advertising in India.

It had concluded abuse of dominance by pointing out that Google:

Blends its own services with general web search results using ways that don’t apply to non-Google websites. It steers users to its own products and services and produces biased results, thereby adversely impacting the markets for general web search, search advertising and ancillary markets such as travel, maps, e-commerce etc.

Indulges in discretionary behaviour as regards its compensation policy, that is, it does not compensate advertisers for losses that can be attributed to Google’s system error.

Imposes unfair conditions on trademark owners whose trademarks are allowed to be bid as keywords by third parties for online search advertising.

The regulator has partly agreed with the DG’s conclusion and stated:

Google has abused its dominant position in online general web search and web search advertising services in India.

Google through its search design has not only placed its commercial flight unit at a prominent position on Search Engine Result Page, it has also allocated disproportionate real estate thereof to such units to the disadvantage of verticals trying to gain market access.

Google has provided a further link in such commercial units which leads users to its specialised search result page, resulting into unfair imposition upon the users of general search services as well.

Prohibitions imposed under the negotiated search intermediation agreements upon the publishers have been held to be unfair as they restricted the choice of these partners and prevented them from using the search services provided by competing search engines.

Google was leveraging its dominance in the market for online general web search, to strengthen its position in the market for online syndicate search services. The competitors were denied access to the online search syndication services market due to such a conduct.

However, the CCI did not find any contravention in respect of Google’s specialised search design, AdWords, online intermediation and distribution agreements.

The regulator’s decision is largely in Google’s favour and deviates significantly from adverse findings in the DG report, said Nisha Kaur Uberoi, national head-competition law at Trilegal.

The CCI’s decision notes that product design is an important and integral dimension of competition, undue intervention in designs of SERP can affect legitimate product improvements. This goes to show that the CCI views the Indian technology market as a thriving and competitive space and is going to continue to take a pro-innovation stance.

Nisha Kaur Uberoi, National Head-Competition Law, Trilegal

Besides, the finding of infringement in the decision are not major and relate mostly to historical practices of Google that have since been discontinued, Uberoi added. “At most, the decision calls for minor changes to Google’s search features and search intermediation agreements.”

The order implies that there are cases and other complainants that would come before the CCI, now that it is established that Google is dominant, Naval Chopra of Shardul Amarchand Mangaldas, the counsel for Matrimony.com told BloombergQuint. The quantum of penalty, however, is a huge surprise, he added.

A Rs 136 crore penalty for a company that has an annual revenue of $ 110 billion last year, is really peanuts. And the CCI in its order has actually expressed dismay at the manner in which the request for Google’s turnover information was responded to. So there is a potential that turnover details that Google provided were not a full and fair disclosure, and there is something to watch out for.